Congress Failed to Eliminate Costly Food Stamp Loophole

It took Congress months to come up with a farm bill, but in the end all it did was make a miniscule tweak to a problematic loophole in the food stamp program known as “heat and eat.” But their small reform doesn’t seem to be working.

As we explain in a new Heritage Foundation paper, after the farm bill passed, Members of Congress claimed they had closed this loophole, but states are continuing to exploit it. Here’s the story:

Under the heat-and-eat loophole, food stamp households that also receive assistance from the Low-Income Home Energy Assistance Program (LIHEAP) in nominal amounts can be eligible for a higher amount of food stamp benefits.

Thus, some states and jurisdictions had been issuing LIHEAP checks to food stamp households for amounts as small as $0.10 per year simply to trigger the increase in a household’s food stamp benefit. The LIHEAP checks are often funded in part or fully with federal dollars. States were using federal dollars to bring in more federal dollars. Both liberals and conservatives have criticized this loophole.… But instead of ending the loophole entirely, the [farm] bill actually only narrowed it. The new law requires that a household’s LIHEAP benefit must be greater than $20 per year to qualify for the increased food stamp benefits.

This change in the law has not stopped many states from continuing to exploit this loophole. Seven of the 17 states or jurisdictions that use the loophole have already announced that they will continue to do so, and five others are either planning to do so or considering doing so. For example, New York will pay $6 million of LIHEAP to receive $457 million of extra food stamp dollars from the federal coffers in return.

The [Congressional Budget Office] estimated that the farm bill’s reform of this loophole would result in a savings of $8.6 billion over 10 years. However, the continued use of this loophole threatens the amount of savings that could actually be achieved.

Congress should have made real reforms to the massive food stamp program. Heat-and-eat should have been terminated, not merely modified. Another loophole known as “broad-based categorical eligibility” should also have been eliminated. This loophole allows states to not only fast-track individuals onto the program but also allows applicants to bypass asset tests, meaning that even households with unlimited savings can be eligible for food stamps.

First and foremost, however, Congress should have created a strong work requirement for able-bodied adults on food stamps. This would promote self-sufficiency and serve as a gatekeeper for the program to ensure that the most in need are receiving assistance.

Congress should have reformed food stamps when it had the opportunity. But it shouldn’t wait for another farm bill to get around to it.

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